What is the primary difference between a mortgage and a deed of trust?

The primary difference between a mortgage and a deed of trust lies in the number of parties involved in each transaction. A mortgage involves two parties: the borrower (mortgagor) and the lender (mortgagee). In contrast, a deed of trust includes three parties: the borrower (trustor), the lender (beneficiary), and a third party known as the trustee. The trustee holds the legal title to the property on behalf of the lender until the borrower pays off the loan. This structure allows the deed of trust to utilize a non-judicial foreclosure process, making it generally quicker and less expensive for lenders to recover their investment in the event of a default.

While the other options address features related to mortgages and deeds of trust, they do not accurately capture this fundamental and actionable difference in party involvement. Hence, recognizing the unique structure of these documents is crucial for understanding how they function within real estate finance.